musing on my asset(s) ( allocation )

[mh]

musing on my asset ( allocation ) which i haven't done in a looong time. most all of the below has been riding since i early retired or longer

-- the basics: 65 married i would guess an avg life span.
-- 4M no debt - 20% bonds 80% equities
1/2 taxable , 1/4 roth, 1/4 IRA
-- equities are some sprinkling of stocks/funds but mostly just stuff like total stock, wellesley, & wellington
very little international stuff
-- two notable single stocks are Applied Materials 300k (taxable) & Apple 600k (ROTH)
which i bought small amounts of long ago and they have been sitting/accumulating ever since

-- I have i would guess 7 years (approx) of bond assets i could spend down assuming 120k/yr withdrawl rate.
i think i'm fairly comfortable with that , higher might be nice. but that's only after recent developments
that are likely self evident to most.

i do think it might have been better it i had some amount of international holdings perhaps. what would you do on that front?
nothing is my default decision. but i would be curious on other people's takes, along with any other comments that occur to you

 

[imjustawarrior]

Just to be clear, you are 80% equity and 20% bond. I don't see that you need to change anything if you are happy with what you have. I wouldn't add international at this point. Almost 25% of your portfolio is in two stocks. That would seem to be the biggest risk.

Do you want to lower your risk? If so, I would get rid of the individual stocks. I would also probably hold enough bonds to last for your remaining years. I probably would not make any changes that would significantly impact taxes. You could leave the Applied Materials to heirs to get a stepped up cost basis.

Just some thoughts.

 

[COcheesehead]

What problem are you trying to solve? What are your goals?

 

[mh]

Just to be clear, you are 80% equity and 20% bond. I don't see that you need to change anything if you are happy with what you have. I wouldn't add international at this point. Almost 25% of your portfolio is in two stocks. That would seem to be the biggest risk.

Do you want to lower your risk? If so, I would get rid of the individual stocks. I would also probably hold enough bonds to last for your remaining years. I probably would not make any changes that would significantly impact taxes. You could leave the Applied Materials to heirs to get a stepped up cost basis.

Just some thoughts.

thanks for the reply.

yes the percentages are correct. the big individual stocks are tax deferred luckily so i could diversify those , without any immediate issues tax wise. i am thinking that is probably not a bad idea. if i do decide to get some more bonds in my allocation, converting some portion the apple and/or Applied materials stock to a bond vehicle seems like it might make sense for me

 

[mh]

What problem are you trying to solve? What are your goals?

lower my risk some in a measured way.

 

[pb4uski]

With a 3% WR, the world is your oyster... 100/0 or 0/100 or anything in-between would be just fine.. at low WRs it becomes a matter of personal preference and what allows you to sleep well at night.

I agree that it would be best to lower your concentration risk and diversify more. Applid materials is 7.5% of your total and Apple is 15%... too high... I would rein them in to 5% or less.

 

[COcheesehead]

lower my risk some in a measured way.

Risk of what? Market corrections, SORR, be more specific please.

 

[mh]

Risk of what? Market corrections, SORR, be more specific please.

Yes: correction / protracted down market / SORR is the gist

 

[COcheesehead]

Yes: correction / protracted down market / SORR is the gist

Look for assets uncorrelated to the market indexes. There is a thread on here regarding alternative investments. I have 15% of my portfolio devoted to two highly uncorrelated investments that have been beating the S&P.

 

[imjustawarrior]

I think ten years in bonds and the rest in low cost index equity funds would be a sweet spot for me if I was in your situation. You have plenty of money. As pb4uski said, you have a lot of margin.

 

[Koolau]

You could run your numbers through FIRECalc again. Just a thought.

I'm sure you're at "100%" there.

 

[engineernerd]

I think you'll be fine doing nothing, but in your shoes I would trade some of the Apple shares for other stocks in different industries, or maybe foreign-stock index ETFs or a small-cap or mid-cap index ETF. Something maybe less tech-oriented, since the total US stock market is now so dominated by tech.

 

[Slim11]

Yea, when the snp dropped a bit all the hype was in the European and foren markets saying that when the snp dropps the foreign market does well. But usally the snp does much better over the course of time. If it makes you feel better get a foreign etf. Make it 5 percent of you earning, make nothing of it most years and call it good. That what I did. Lol. Divest a bit if you are afraid of a tec drop. Like others said bonds, etc. Unless you need growth, but it dosent seem that way.

 

[mh]

You could run your numbers through FIRECalc again. Just a thought.

I'm sure you're at "100%" there.

yes that's correct i just did another run coming up with 100% - using previously stated numbers above. i haven't included SS (~40k yr) in the mix in any of this as as added level of conservative fudging to the calculations either. so given all of this, i think pb4uski's comment sums up the situation as i'm coming to see it so far. i hadn't paid attention to how big those two larger stock holdings had gotten percentage wise. i think i will likely reallocate down the Apple one quite a bit (in the ROTH) and chip away at the Applied materials for income since it's taxable.

thanks everybody who has commented so far - they have been valuable

 

[ut2sua]

lower my risk some in a measured way.

The $600K in Apple stock is your biggest risk that could be deal with without any tax consequences. Apple stock value may go up or may go down as a faster rate than most diversified ETFs, so just make sure you will be at peace with your decision either ways.

 

[ncbill]

OP has no SORR to worry about.

 

[imjustawarrior]

OP has no SORR to worry about.

Why is that?

 

[pb4uski]

^^^ I suspect it is because their retirement is so well funded (or arguably even overfunded) given their initial WR of 3% $120 withdrawals divided by $4m in retirement assets).

 

[ncbill]

^^^ I suspect it is because their retirement is so well funded (or arguably even overfunded) given their initial WR of 3% $120 withdrawals divided by $4m in retirement assets).

And ~7 years of spending in fixed income.

I keep several years of spending in fixed as well.

ST Treasury fund because it's not for yield but for liquidity...risk is taken on the equity side.